05 March 2010 17:45 [Source: ICIS news]
HOUSTON (ICIS news)--Rising US ethylene prices have given a significant bump to LyondellBasell’s olefins earnings, but are continuing to squeeze polyethylene (PE) margins, the producer said on Friday.
Ethylene has surged for much of 2010, peaking with trades at 70 cents/lb or more over the past two days, LyondellBasell chief executive Jim Gallogly noted.
“The trend between rising ethylene margins and PE squeeze is quite clear,” Gallogly said. “While there are a number of price increases in the works, there is definitely some compression on margins.”
Speaking on a monthly conference call with analysts, the company said its January olefins and polyolefins earnings before interest, taxes, depreciation and amortisation and restructuring costs (EBITDAR) were $96m (€71m) – well ahead of the operating forecast of $60m, Gallogly said.
Earnings were also up from a $46m loss in the segment in January 2009.
However, US PE - which was the company’s strength in the second half of 2009, based largely on export opportunities to ?xml:namespace>
The company predicted the PE margin squeeze in early February.
In addition, price increases in US PE should in time catch up with ethylene on a proportional basis, the company said.
“The whole complex is moving up,” Gallogly said.
Looking ahead, olefins gains could be hurt by plans to take French olefins and polyethylene plants down for six weeks of maintenance, Lyondell said. The company noted, however, that it had taken actions to minimise the impact.
Overall, January earnings were $110m - under the operating forecast of $137m because of continued weakness in the refining and oxyfuels segment, Lyondell said.
That sector posted a loss of $32m in January, compared with a predicted $37m profit as industry refining trends remained weak.
Even so, the company’s
Going forward, the weak refining conditions were expected to continue in early 2010, but a seasonal margin recovery in oxyfuels was forecast.
($1 = €0.74)
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